The Growing Premiumisation of the Chinese Wine Market

Chinese wine consumers are increasingly prepared to spend more on wine. Even over the past year the industry has witnessed significant growth on average per bottle prices, with increases of 45% in some cases.

The market historically started buying for health, now we are seeing growth in demand for quality. The market is becoming more sophisticated,” noted Marcus Ford, the Asia market manager for Wines of South Africa while speaking at the recent Hong Kong International Wine & Spirits Fair. As Chinese consumers learn more about wine they seek out higher quality wines that fit with an aspirational lifestyle and more discerning palate.

Leading the charge for higher per bottle prices are online wine purchases and super premium wines. According to research by Extra Data, a research company based in Chengdu, the majority of the growth in terms of value comes from wines priced at RMB 500 (US$72) and above. From July 2017 to July 2018 this sector of the market made up an impressive 42% of the total sales value.

Interestingly, although around 80% of the wines currently consumed in the country are made domestically in China, those super premium wines that are driving growth are usually imported wines. China doesn’t produce sufficient quantity of high end wines to meet the growing demands of well-educated, wealthy consumers. This is shown by the rapid growth in wine imports; in 2002 China imported 1.8 million litres of wine, but just between January and March 2018 200.57 million litres of wine were imported.

Heading up the list for imported wines is France with Bordeaux and Burgundy enjoying a particularly privileged position as go-to wines for many Chinese consumers. Next is Australia which isn’t surprising given decreasing import tariffs on Australian wines which are set to be reduced to zero in 2019. Chile has also benefited from a free trade deal with China which has put its wines in third place on the list. Following close behind Chile is Spain and a little further behind is Italy which complete the top five countries for Chinese wine imports.

This growing thirst for super premium imported wines amongst China’s upper and middle classes provides foreign brands and wine producers with exciting opportunities in the Chinese market. To make the most of these opportunities, brands will need to be ready to adapt themselves to the demands and expectations of the Chinese consumer and craft a solid marketing strategy that appeals to this demographic.